Answer Happy

Part Four Instructions In this part of the practice set, the student will prepare a Bank Reconciliation for the month of January. Start by using the ending balance in your cash account for the cash for your books and the ending balance on the bank statement for the bank balance. Requirements 1. Correct Errors: Correct any errors that you made on the journal entries. Both the debits and the credits must equal each other. 2. Bank Reconciliation: Using the cash balance per books and the bank statement, prepare a bank reconciliation. An example of the Bank reconciliation is located at the back of this practice set. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjusting journal entries to your cash account by entering them in the general 8 | Page
journal of the practice set so that the general ledger cash account agrees with the bank reconciliation. 4. Assume that any errors are made by the bank. 5. After preparing the bank reconciliation answer the questions in Blackboard and then staple the bank reconciliation to the back cover.
Save to neunive Bank Statement Ivan's Instrument Center 123 Main Avenue El Paso, Texas 79945 Wells Fargo Bank Page 1 PO Box 12345 El Paso, Texas 79902 WELLS FARGO BANK STATEMENT Ivan's Instrument Center
ad Print Save to OneDrive Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 01/01/2018 January January 01/31/2018 Deposits Added 1/2/2018 Deposit 1 1/5/2018 Deposit 2 1/20/2018 Deposit 3 1/23/2018 Deposit 4 1/28/2018 Deposit 5 $3,600 1008 $200 $18,000 1012 $530 $800 $700 DM $900 $30,000 $8,000 $7,450 Wells Fargo Bank Statement-Checks Paid and other Debits 1001 $3,400 1007 $500 1002 1003 1004 1005 1006 $8,303 $10,825 $30 Check Printing Fee $0 $64,578 $28,660 $35,918
1. 2. 3. 5. Date 1/02/18 1/02/18 Deposit #1 1/03/18 1/03/18 Deposit No. /Check No. 1/03/18 Ck #1001 Ck #1002 Description Ivan Smith met with his lawyer and CPA for advice on starting the business. They decided that Mr. Smith would organize the business as a corporation. The lawyer told Mr. Smith to register the company name, Ivan's Instrument Center, with the County of El Paso. In addition, Mr. Smith will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. The lawyer agreed to prepare the Articles of Incorporation to be filed with the Secretary of State of Texas. The CPA has agreed to help Mr. Smith set up his accounting system. Mr. Smith opened a business checking account at Wells Fargo Bank by depositing $30,000. The corporation issued him a stock certificate for 2,000 shares of common stock with no par value. Mr. Smith signed a one-year rental agreement with Reynolds Realtors for warehouse space. He was required to pay $3,400 for rent for the months of January 1, 2018 - December 31, 2018. Arranged for a general business liability insurance policy and paid $3,600 to State Penn Insurance. This premium is for eighteen months coverage. Purchased a new computer system that cost $3,000 from Office Mart for use in the business. Mr. Smith signed a six-month, 12% installment note payable for the cost of the system. The computer system has an estimated useful life of 3 years and the residual
6. 7. 8. 9. 1/05/18 Deposit #2 1/05/18 1/06/18 1/06/18 10. 1/08/18 11. 1/08/18 Ck #1003 Ck #1004 Ck #1005 12. 1/13/18 Ck #1006 13. 1/18/18 (salvage) value is $0. This will be recorded as Computer Equipment, and depreciated using the Straight-Line Depreciation method accordingly. Signed a note payable to borrow $8,000 from Wells Fargo Bank. Interest is 7% annually and the note is to be repaid with interest in six months. Purchased a delivery van for $18,000 from Tony's Motors. The estimated service life of this asset is 5 years. The residual (salvage value) is $2,000. This will be recorded as Delivery Van and depreciated using the Straight-Line Depreciation Method. Paid $800 to have Ivan's logo painted on the side of the van. This should be added to the cost of the van and depreciated over the life of the van. Paid $700 for business cards, flyers, and posters. This will be recorded as prepaid advertising. Purchased $10,000 of inventory-guitars from Gary's Guitars on account. The vendor extended credit terms of 2/15, n/30. Purchased $8,000 of inventory-violins from Vic's Violins on account. The vendor extended credit terms are 2/10 n/30. Mr. Smith received and paid the $900 charge from his lawyer. Ivan's Instrument Center is now open for business. Sales will be both retail and wholesale. Retail customers will purchase online and at the shop and will be charged an 8.25 % sales tax. Mr. Smith will allow major customers to charge their purchases on account.
14. 1/18/18 15. 1/18/18 16. 1/18/18 17. 1/16/18 Ck #1007 18. 1/20/18 Deposit #3 19. 1/22/18 Ck #1008 20. 1/23/18 your recall and wholesale. Retail customers will purchase online and at the shop and will be charged an 8.25% sales tax. Mr. Smith will allow major customers to charge their purchases on account. Purchased $200 of supplies consisting of instrument strings, pics, and resin and purchased them on account. Purchased shipping supplies of $500 for cash. Sold instruments to Sue's Junior Symphony and Ensemble for $7,670 and the sales tax collected is $633. The cost of the guitars is $3,000 and the cost of the violins is $1,600. Sue's Junior Symphony and Ensemble paid on account and Ivan will bill them. Purchased additional guitars on account for $3,500 from Gary's Guitars. Credit terms are 2/15, n/30. Recorded internet sales for the first five days of operation. Sales totaled $7,000. The sales tax collected totaled $450. The $7,450 was deposited in the bank. The cost of merchandise sold was $3,900 (guitars cost $3,500; violins cost $400). Received and paid the $200 invoice for supplies (strings, resin and pics) purchased on 1/18/18. Mr. Smith donated a guitar and a violin to the National Music Society fund raiser. He felt that this was a good way to advertise his
21. 1/23/18 22. 1/23/18 25. 1/23/18 23. 1/23/18 Ck #1010 24. 1/23/18 Deposit #5 26. 1/25/18 Deposit #4 27. 28 Ck #1009 Ck #1011 Deposit #6 1/28/18 1/30/18 Ck #1012 new business. His business was listed as a sponsor and a large ad was put in the fund raiser program. Cost of the guitar was $250 and the violin was $200. Mr. Smith considers this an advertising expense. Received payment in full from Sue's Junior Symphony and Ensemble. The payment was deposited in the bank. Mr. Smith paid his credit card bill for the month. The total was $480 which was for gas for the delivery van. Paid for the violins purchased from Vic's Violins on 9/08/18. Internet and retail sales totaled $10,000 and sales taxes of $825 was collected. The cost of the merchandise sold was $5,700 (Guitar $4,500; violins $1,200). The money was deposited in the bank. Paid the balance due to Gary's Guitars. There are two invoices; one on 1/8/18 and the other on 1/16/18. Sales of $5,000 was deposited from online customers and $413 of sales tax was collected. The cost of the merchandise was $500 for guitars and $2,000 for violins. Received but did not pay the phone bill for the month, $165. Paid the fir amant
24. 1/23/18 25. 1/23/18 Ck #1011 26. 1/25/18 Deposit #5 27. 1/28/18 28. 1/30/18 Deposit #6 Ck #1012 29. 1/30/18 Deposit #7 30. 1/31/18 Ck #1013 31. 1/31/18 Ck #1018 from Vic's Violins on 9/08/18. Internet and retail sales totaled $10,000 and sales taxes of $825 was collected. The cost of the merchandise sold was $5,700 (Guitar $4,500; violins $1,200). The money was deposited in the bank. Paid the balance due to Gary's Guitars. There are two invoices; one on 1/8/18 and the other on 1/16/18. Sales of $5,000 was deposited from online customers and $413 of sales tax was collected. The cost of the merchandise was $500 for guitars and $2,000 for violins. Received but did not pay the phone bill for the month, $165. Paid the first monthly installment on the computer equipment. The payment amount is $530. Of this amount, $30 is for interest and $500 is for principal. Make the check payable to Office Mart. Recorded internet sales for the last week of the month. Sales of $4,500 were deposited. The cost of the merchandise sold was $2,250 (guitars $250; violins $2,000). Sales tax collected is $371. Paid all sales tax owed for January to the Comptroller of Public Accounts. Declared and paid a cash dividend of $200 to Ivan Smith.